Click to view the Slideshow Heather Bone said she intends to have the living room mantel in her new home replaced because it is bowed. Carl Elmore Savannah Morning News E-mail story Print story Your opinion

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Heather Bone thought she was buying her dream home when she signed the contract for a custom-built two-story in February.

But when her $310,000 Franklin model wasn't finished by June, a month after building giant D.R. Horton told her it would be, she suddenly found herself homeless.

She spent the next two months living with her mortgage lender, then at a Day's Inn as she faced one delay after another at Lot 30 in the Coffee Pointe subdivision on Savannah's southside.

When the contractor finally told her the home was ready, she found the place in disarray. Flooring wasn't finished, carpeting wasn't tacked, molding wasn't installed.

Bone's recourse?

Yell like hell.

Legally, she can do little else.

That's because new-home contracts are heavily weighted in favor of home builders, experts say.

Most contracts levy stiff fines against buyers if they're just a day late closing. But those same contracts give home builders a year or more after the closing date to finish construction without penalty.

Other provisions prevent buyers from suing, instead requiring binding arbitration if the finished product isn't what they ordered.

Home builders say that delays on their end are often the result of factors outside their control: the weather and the availability of labor and supplies.

And these contracts are little different from those found in markets across the country.

But they are new to Savannah, which for the first time is witnessing assembly-line home construction on a large scale.

And with 40,000 new houses approved for Chatham County over the next 15 years - most on the fast-growing westside - some consumers are coming forward with cautionary tales about what they say is a market that gives every advantage to the builder, and few to them.

'Upside down'

Anyone who's purchased an existing home knows contracts are negotiable.

Prices can go up and down. Contingencies can be added.

How far the seller is willing to bend depends on how hot the property is.

But even though details change, the ground rules remain consistent because most existing home sales use a standard contract endorsed by the Georgia Association of Realtors. It's designed to treat both buyers and sellers with an even hand.

Not so with new homes.

Almost all home builders - and there are dozens in the Savannah area - have their own contracts.

Specifics vary, but the goal is the same, industry watchers say.

"They're all about limiting the builders' liability," said Janet Ahmad, president of Homeowners for Better Building, a nonprofit advocacy group. "And if you've limited your liability, what gives you the incentive to even build the foundation right?"

Home builders counter that their incentive is profit: If they build bad houses, nobody will buy them.

And with so many new communities rising in Chatham, buyers can shop around until they find something that suits them.

"The best thing a home buyer can do is to simply walk around a neighborhood and talk to residents - you've got a whole street full of client referrals," said Stephen Remler, a local builder and president of the Home Builders Association of Greater Savannah. "I'm sure there are some headaches with some of these, but there are also some advantages to them as well."

Almost all reputable home builders offer at least a one-year workmanship warranty, and often up to a 10-year structural warranty.

Goldie Little, president of the Savannah Board of Realtors, said she hasn't heard widespread complaints about new-home contracts.

"All of the new homes are providing people with more of a choice, which is a good thing," she said.

But when housing demand exceeds supply, suppliers have more power to dictate terms.

And most area home builders say that for the past two years, they have been struggling to keep up with demand - a product of low interest rates, the Coastal Empire's growing popularity and the large number of retiring baby boomers.

Those conditions have drawn national builders to Chatham County for the first time, and have helped small local builders evolve into regional players. Stories recounted to the Morning News involve companies from both groups.

Realtor Judy McDougal tried to get one regional builder to put a closing date in a contract for a client earlier this year.

The builder, however, wouldn't budge, giving only verbal assurance when the home would be done - "they said easily by February at the latest."

The home wasn't completed until the end of May.

The builder gave the client a four-week stipend to stay at a nearby motel. When that ran out, McDougal's client was forced to live with friends for two months.

"In this market, there's no negotiation," McDougal said. "We have to use their (builder) contracts, and of course we read them over, but there is little recourse."

Realtor Barkley Brown was able to secure a set closing date for clients buying a new home in a subdivision off Quacco Road.

But it meant little since the contract gave the builder a year after the closing date to finish without penalty.

The buyer was forced to live in Brown's home for 10 days while he waited for workers to finish the $140,000 house.

"They (builders) know they can get away with these things because the contract says they can get away with it," Brown said. "The whole process is so upside-down toward the builder."

Five different Realtors contacted for this story had clients who experienced similar problems, though most were reluctant to name names for fear of adversely affecting their business.

While most new home transactions operate smoothly, there have been enough concerns that the Savannah Board of Realtors held a forum with builders and talked about contract issues.

Broker Ben Farmer, who teaches classes on contract law, said he doesn't like that in-house agents selling new homes at these subdivisions don't have to be licensed. Nor does he like the provisions that give builders unlimited time to complete construction.

"Those builder contracts are a real problem," Farmer said. "They ain't worth the paper they're written on."

Doug McManamy, a Savannah attorney who handles a large number of closings, said it's a simple matter of "supply and demand."

"If I've got 10 people lining up to buy my house, and you've got problems with the contract, I can get somebody else," he said. "I'm not saying these contracts are bad. They're just not in favor of the buyer and the buyer should be aware of that."

The fine print

Heather Bone's home was supposed to be completed before her husband, Steve, a Georgia Air National Guard pilot, left in June for a three-month deployment to Afghanistan.

Steve returned last week, and the home still wasn't finished.

Workers recently replaced a bedroom wall that had bowed.

"The little things I can deal with, but it's the functional stuff that bothers me," Heather Bone said. "I didn't expect to have plumbing and electrical problems when I moved in."

D.R. Horton, Beazer and Centex Homes were part of the first wave of national builders to descend on the Savannah market last year as almost a dozen master-planned communities, and dozens of smaller ones, began to rise to the west and south.

Horton, the nation's second-largest builder, planned developments in Godley Station, The Farm at Morgan Lakes and at Coffee Pointe, a gated community on Coffee Bluff.

The Bones liked what they saw in Coffee Pointe. It was quiet and safe, with a lot of trees.

They spent nine hours at the Horton design center in Bluffton on Feb. 18, picking out custom fixtures to add to their Franklin model, upping the standard price by $45,000. They said the sales agent told them the house should be ready in May.

But within the contract they signed that day was this provision: "The builder will be held harmless for any delays in closing."

If the Bones weren't ready to close, however, they faced penalties of $250 per day.

Builders say such "hold harmless" provisions are necessary to protect them because of the myriad things that can go wrong in construction - everything from bad weather to supply shortages to inspection delays.

Remler and other builders say the high volume of new-home construction in west Chatham makes it difficult to find good labor, frequently delaying projects.

"In the Savannah area, we don't have enough trades," said Beth Williams, co-owner of Richmond Hill-based Ernest Homes, which sold 104 houses last year. "We don't have the framing crews like they have in the metro Atlanta area - we have local people who work and live here and they can only do so much. The good ones are very busy."

Messages left with national home builders Beazer and Centex went unreturned Wednesday. Messages left with two local builders also went unreturned.

Heather Bone believes Horton was trying to complete too many homes in too short a time frame.

"From the beginning, I didn't like the contract that we signed - it was so geared toward them," she said. "But the real nightmare didn't happen until the end."

Four messages left for Glenn Gault, D.R. Horton's vice president for construction at the company's Bluffton office, which oversees Savannah, went unreturned this week and last.

A call to the Coffee Pointe sales office was referred to division Vice President Ron Bunner.

Four messages left Tuesday and Wednesday for Bunner went unreturned.

A message left Wednesday for a spokesperson at company headquarters in Texas also went unreturned.

Market dictates contracts

The Bones put their Georgetown house on the market in February, and were under contract by March - a quicker turnaround than expected. The buyers agreed to hold off closing until the Bones' Coffee Pointe home was ready.

But by early June, the contractor had yet to install drywall.

Then everything began to crumble.

Steve was shipped to Afghanistan, leaving Heather alone just as the Georgetown buyers told them they couldn't hold off any longer.

A frantic Heather moved in with her mortgage lender and his wife. Heather's hosts even accepted the Bones' dachshund and two cats.

"They were so kind, and I, of course, felt so horrible," she said. "I was buying them groceries and liquor because I felt so wrong."

She grew uncomfortable after her dachshund wet the couch, and moved into a Day's Inn. Horton agreed to pay for four days at the hotel, she said; Bone ended up spending more than $1,000 for four weeks.

Meanwhile, she was at the homesite nearly every day getting updates from her contractor.

On June 24, Horton sent her a letter saying closing would be July 22.

Four days before the scheduled closing, the contractor called and asked her to do a punch list walk-through of the house. It's the final step before closing, when the buyer lets the contractor know the work still to be finished before the sale is finalized.

Bone took one look inside and refused to do it.

The floors and carpeting weren't installed, she said, and the fireplace mantle hadn't been built. Walls were painted the wrong color. Crown molding wasn't in place.

Two days later, she returned and again refused to do the walk-through. The electric box hadn't been installed so she wouldn't be able to tell if fixtures worked.

"I told him he'd have a punch list a mile long," she said.

She says the contractor told her he had a certificate of occupancy - a city-issued permit that indicates a structure is fit for habitation and ready for sale. She said he threatened to begin fining her $250 per day.

Savannah city records show a certificate of occupancy wasn't issued until more than a week later, on July 29.

Two more aborted walk-throughs followed until a closing date was set for July 29. Desperate for a home, and tired of a July cell phone bill of $511 for calls trying to get things in order, she closed that day.

There were still plenty of problems: Doors lacked knobs, the corbels were the wrong style, paint hadn't been scraped from windows. When she turned on some lights, the circuit breaker tripped.

Bone said the company is still working to fix these problems.

"I don't think they could get away with this if the market weren't the way it is," she said.

Some real estate watchers say the national market is showing signs of cooling off, though many don't agree it's happening here.

If it does, home buyers will be in a better position to demand contract changes before they sign. And, as more builders enter the market, competition should also make it more buyer-friendly.

"If I was going to give advice, it would be to look at multiple properties in different developments, study the contracts and bargain hard. Language can be changed and it doesn't hurt to ask," said Bruce Hahn, president of the American Homeowners Foundation.

"The market has to cool sometime, and when that happens, the negotiating advantage the builders have had for the last couple of years is going to dwindle."

http://www.savannahnow.com/stories/082605/3247168.shtml
This is part of an occasional series exploring the dramatic residential growth focused in Chatham County.